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ORGANIZATIONAL BEHAVIOR

OBJECTIVES After studying chapter 15 and


listening to class lecture,you should
be able to:

1. Identify the six key elements that define an organization’s


structure.
2. Explain the characteristics of a bureaucracy.
3. Describe a matrix organization.
LEARNING

4. Explain the characteristics of a virtual organization.


5. Summarize why managers want to create boundaryless
organizations.
6. Contrast mechanistic and organic structural models.
7. List the factors that favor different organizational
structures.
8. Why do structures differ?
What Is Organizational Structure?

Key
KeyElements:
Elements:
• • Work
Workspecialization
specialization
• • Departmentalization
Departmentalization
• • Chain
Chainof
ofcommand
command
• • Span
Spanof
ofcontrol
control
• • Centralization
Centralizationand
and
decentralization
decentralization
• • Formalization
Formalization
What Determines
Organizational Structure?

➀ To what degree are tasks subdivided into separate jobs?


➁ On what basis will jobs be grouped together?
➂ To whom do individuals and groups report?
➃ How many individuals can a manager efficiently and effectively direct?
➄ Where does decision-making authority lie?
➅ To what degree will there be rules and regulations to direct employees
and managers?
Key Design Questions and Answers for Designing the
Proper Organization Structure
Organization
Strategy
Size

Why Do
Structures
Differ?
Technology Environment
Common Organization Designs

A Simple Structure:
Jack Gold’s Men’s Store
Organizational Chart of a Manufacturing Firm
Board Board Board Board
member member member member

Chief
Executive Legal
Officer counsel

President

V.P Sales/ V.P Human V.P V.P Research


Marketing Resources Production and Development

Industrial Consumer Industrial


Products
Consumer Industrial Consumer Industrial
Products Consumer
Products Products Director- Director- Products Products Products Products
Director- Director- Human Human Director- Director- Director- Director-
Sales Sales Resources Resources Production Production R&D R&D

Western Eastern Western Eastern


Region Region Region Region
Industrial Industrial Consumer Consumer
Products Products Products Products etc. etc. etc. etc. etc. etc. etc. etc. etc. etc.
Sales Sales Sales Sales
Manager Manager Manager Manager
Tall versus Flat Organizations
Chief
Executive
Tall Organization
Tall hierarchy

Chief Relatively narrow


Flat Organization Executive span of control
Flat hierarchy

Relatively wide
span of control
A Product Organization
Chief
Executive
Officer

President

Product Product Product


Group 1 Group 2 Group 3

Pro- Pro- Pro-


Sales R&D Acctg. Sales R&D Acctg Sales R&D Acctg.
duction duction duction
A Horizontal Organization

Overall Manager

Team responsible for core process Objective:


Adviser
(e.g., generating and fulfilling orders) Reduced
cycle time

Adviser Team responsible for core process Objective:


(e.g., product development) More new
products

Adviser Team responsible for core process Objective:


(e.g., flow of materials) Enhanced
product
quality
Common Organization Designs
The Bureaucracy
 Strengths  Weaknesses
– Functional – Subunit conflicts
economies of with
scale organizational
– Minimum goals
duplication of – Obsessive concern
personnel and with rules and
equipment regulations
– Enhanced – Lack of employee
communication discretion to deal
– Centralized with problems
decision making
Decentralization: Benefits When Low and When
High

Low Decentralization High Decentralization


(High Centralization) (Low Centralization)

Eliminates the additional Can eliminate levels of


responsibility not desired by management, making a leaner
people performing routine jobs organization

Permits crucial decisions to be Promotes greater


made by individuals who have opportunities for decisions to
the “big picture” be made be people closest to
problems

Table 12-1
The Matrix Structure

Cross-Functional Clear
Coordination Accountability

Dual Chain Allocation


of Command of Specialists
Matrix Structure (College of Business Administration)

(Director)

(Dean) Employee
A President

Matrix Organization Farm Machinery


Division
Functional
authority

Project Production Legal Engineering Accounting


authority department department department department

Project Production Legal Engineering Accounting


Alpha support support support support
manager group group group group

Project Production Legal Engineering Accounting


Beta support support support support
manager group group group group

Project Production Legal Engineering Accounting


Gamma support support support support
manager group group group group
Mechanistic vs. Organic Designs
Structure

Dimension Mechanistic Organic

Stability Change unlikely Change likely

Specialization Many specialists Many generalists

Formal rules Rigid rules Considerable flexibility

Authority Centralized in a few top people Decentralized, diffused


throughout the organization

Table 12-2
Mechanistic Versus Organic Models
A Virtual Organization
Organization Structure: Its Determinants and
Outcomes
New Design Options

Concepts:
Concepts:
Provides
Providesmaximum
maximum
flexibility
flexibilitywhile
while
concentrating
concentratingon onwhat
what
the
theorganization
organizationdoes
does
best.
best.
Disadvantage
Disadvantageisisreduced
reduced
control
controlover
overkey
keyparts
partsof
of
the
thebusiness.
business.
What Is Organizational Structure? (cont’d)

Division
Divisionof
oflabor:
labor:
• • Makes
Makesefficient
efficientuse
useof
of
employee
employeeskills
skills
• • Increases
Increasesemployee
employeeskills
skills
through
throughrepetition
repetition
• • Less
Lessbetween-job
between-job
downtime
downtimeincreases
increases
productivity
productivity
• • Specialized
Specializedtraining
trainingisis
more
moreefficient
efficient
• • Allows
Allowsuse
useof
ofspecialized
specialized
equipment
equipment
Economies and Diseconomies of Work
Specialization

EXHIBIT 15-2
What Is Organizational Structure? (cont’d)

Grouping
GroupingActivities
ActivitiesBy:
By:
• • Function
Function
• • Product
Product
• • Geography
Geography
• • Process
Process
• • Customer
Customer
What Is Organizational Structure? (cont’d)

Narrow
NarrowSpan
SpanDrawbacks:
Drawbacks:
• •Expense
Expenseof ofadditional
additional
layers of management.
layers of management.
Concept: • •Increased
Increasedcomplexity
complexityof of
Concept:
vertical communication.
vertical communication.
Wider
Widerspans
spansofof
management increase • •Encouragement
Encouragementof ofoverly
overly
management increase tight supervision and
organizational
organizationalefficiency.
efficiency. tight supervision and
discouragement
discouragementof of
employee
employeeautonomy.
autonomy.
Contrasting Spans of Control

EXHIBIT 15-3
What Is Organizational Structure? (cont’d)
Common Organization Designs (cont’d)

Key
KeyElements:
Elements:
++Gains
Gainsadvantages
advantagesofof
functional
functionaland
andproduct
product
departmentalization
departmentalizationwhile
while
avoiding
avoidingtheir
their
weaknesses.
weaknesses.
++Facilitates
Facilitatescoordination
coordinationof
of
complex
complexand
and
interdependent
interdependentactivities.
activities.
––Breaks
Breaksdown
downunity-of-
unity-of-
command
commandconcept.
concept.
New Design Options

Characteristics:
Characteristics:
• •Breaks
Breaksdown
down
departmental
departmentalbarriers.
barriers.
• •Decentralizes
Decentralizesdecision
decision
making
makingtotothe
theteam
teamlevel.
level.
• •Requires
Requiresemployees
employeesto to
be
begeneralists
generalistsas aswell
wellas
as
specialists.
specialists.
• •Creates
Createsaa“flexible
“flexible
bureaucracy.”
bureaucracy.”
New Design Options (cont’d)

T-form
T-formConcepts:
Concepts:
Eliminate
Eliminatevertical
vertical
(hierarchical)
(hierarchical)and
and
horizontal
horizontal(departmental)
(departmental)
internal
internalboundaries.
boundaries.
Breakdown
Breakdownexternal
external
barriers
barriersto
tocustomers
customersand
and
suppliers.
suppliers.
Why Do Structures Differ?
Why Do Structures Differ?
Why Do Structures Differ? – Strategy
The Strategy-Structure Relationship

EXHIBIT 15-9
Why Do Structures Differ? – Technology

Characteristics
Characteristicsof
ofroutineness
routineness(standardized
(standardizedor
or
customized)
customized)ininactivities:
activities:
• •Routine
Routinetechnologies
technologiesare
areassociated
associatedwith
withtall,
tall,
departmentalized
departmentalizedstructures
structuresand
andformalization
formalizationinin
organizations.
organizations.
• •Routine
Routinetechnologies
technologieslead
leadto
tocentralization
centralizationwhen
when
formalization
formalizationisislow.
low.
• •Nonroutine
Nonroutinetechnologies
technologiesare
areassociated
associatedwith
withdelegated
delegated
decision
decisionauthority.
authority.
Why Do Structures Differ? – Environment

Key
KeyDimensions:
Dimensions:
• • Capacity:
Capacity:the
thedegree
degreeto
to
which
whichan
anenvironment
environment
can
cansupport
supportgrowth.
growth.
• • Volatility:
Volatility:the
thedegree
degreeof
of
instability
instabilityininthe
the
environment.
environment.
• • Complexity:
Complexity:the
thedegree
degree
of
ofheterogeneity
heterogeneityand
and
concentration
concentrationamong
among
environmental
environmental
elements.
elements.
What Is Organizational Structure? (cont’d)
The Three Dimensional Model of the
Environment

Volatility

Capacity

Complexity

EXHIBIT 15-10
Organizational Designs and Employee
Behavior

Research
ResearchFindings:
Findings:
• • Work
Workspecialization
specializationcontributes
contributesto
tohigher
higheremployee
employee
productivity,
productivity,but
butititreduces
reducesjob
jobsatisfaction.
satisfaction.
• • The
Thebenefits
benefitsof
ofspecialization
specializationhave
havedecreased
decreasedrapidly
rapidlyas
as
employees
employeesseek
seekmore
moreintrinsically
intrinsicallyrewarding
rewardingjobs.
jobs.
• • The
Theeffect
effectof
ofspan
spanof
ofcontrol
controlon
onemployee
employeeperformance
performanceisis
contingent
contingentupon
uponindividual
individualdifferences
differencesand
andabilities,
abilities,task
task
structures,
structures,and
andother
otherorganizational
organizationalfactors.
factors.
• • Participative
Participativedecision
decisionmaking
makinginindecentralized
decentralized
organizations
organizationsisispositively
positivelyrelated
relatedto
tojob
jobsatisfaction.
satisfaction.